The government sponsored Car Allowance Rebate System (CARS), also known as “Cash for Clunkers,” lets you trade in a qualifying old vehicle for a credit – either $3,500 or $4,500 – toward a new, fuel-efficient vehicle. However what many people may not realize, is that their auto insurance cost might increase. Here’s why.
Auto insurance rates are based on many different factors, including the age, make and model of a vehicle. Varying safety factors, costs of repair and loss histories (theft, accident rates) for different cars also influence the auto insurance costs.
So, many older gas guzzlers will probably get a lower insurance rate than newer fuel-efficient Toyota Prius because newer vehicles tend to cost more to repair. Also if you have an old clunker, chances are that you either have high deductibles for collision and comprehensive or removed those coverages altogether to save money.
Once you’ve found some vehicles you like, get several different auto insurance quotes. Car insurance rates vary quite a bit from one company to the next even for the similar amount of coverage. A convenient way to do this is at an online insurance comparison Web site like LowestQuotes.com. At these types of sites you only need to enter your information into one quote request form to get several quotes back from either companies or agents.
Don’t let the idea of increased insurance costs scare you off from taking advantage of this once in a life time Cash for Clunkers program. Just get some comparison quotes and be prepared.